Shri Om Prakash Agarwal, Agra v. DCIT, Agra

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH AGRA BEFORE SHRI R.K. GUPTA JUDICIAL MEMBER AND SHRI P.K. BANSAL ACCOUNTANT MEMBER IT(SS)A NO.09/AGR/2008 BLOCK PERIOD: 01.04.1989 TO 16.02.2000 SHRI OM PRAKASH AGARWAL VS. DY. C.I.T. CENTRA L CIRCLE PROP. M/S. RAVI IRON INDUSTRIES AGRA. E-211 KAMLA NAGAR AGRA. (PAN : ABDDA 1997 Q) IT(SS)A NO.10/AGR/2008 BLOCK PERIOD: 01.04.1989 TO 16.02.2000 THE INCOME-TAX OFFICER-4(3) VS. SHRI OM PRAKASH AGARWAL AGRA. PROP. M/S. RAVI IRON INDUSTRIES E-211 KAMLA NAGAR AGRA. (PAN : ABDDA 1997 Q) (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI K.C. AGARWAL ADVOCATE REVENUE BY : SHRI S.K. MISHRA SR. D.R. ORDER PER P.K. BANSAL A.M.: THESE CROSS APPEALS HAVE BEEN FILED AGAINST THE ORD ER OF THE CIT(A) DATED 28.07.2008 RELATING TO THE BLOCK PERIOD 01.04.1989 TO 16.02.20 00. THE ASSESSEE IS IN APPEAL AGAINST THE PENALTY LEVIED UNDER SECTION 158BFA(2) OF THE INCOM E-TAX ACT 1961 (THE ACT HEREINAFTER) TO THE EXTENT OF RS.2 14 080/- WHILE THE REVENUE IS IN APPEAL AGAINST THE REDUCTION OF THE PENALTY FROM RS.6 00 000/- TO RS.2 14 080/-. 2 2. WE HAVE HEARD THE RIVAL SUBMISSIONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US AND THE PRECEDENT RELIED UPON. THERE HAD BEEN SEARCH IN TH E CASE OF THE ASSESSEE ON 16.02.2000 IN THE ASSESSEES RESIDENTIAL AND BUSINESS PREMISES. THE SEARCH IN RESPECT OF THE BUSINESS PREMISES WAS DECLARED AS ILLEGAL BY THE HONBLE ALLAHABAD HIGH C OURT IN WRIT PETITION NO.275/2000 VIDE ORDER DATED 03.09.2003. ON THE BASIS OF THE PAPERS SEIZE D THE DEPARTMENT CALCULATED THE RECEIPTS AND PAYMENTS FOR THE FINANCIAL YEARS 1997-98 TO 1999-20 00 AT RS.10 56 898/- AND RS.12 71 777/- RESPECTIVELY AND ESTIMATED THE INCOME OF THE ASSESS EE AT RS.15 70 571/- WHICH INCLUDES RS.12 71 777/- AS EXPENDITURE OUTSIDE THE BOOKS OF ACCOUNTS. THE ASSESSEE HAS RETURNED UNDISCLOSED INCOME AT RS.5 04 000/- BY APPLYING 5% PROFIT ON TOTAL TURNOVER. THE ASSESSEE HAS ALSO SHOWN THE AGRICULTURAL INCOME AT RS.2 52 800/- IN THE BLOCK RETURN FOR THE A.Y. 1990-91 TO 2000-01 FOR WHICH THE ADDITION WAS MADE BY THE A.O. WHICH WAS DELETED BY THE TRIBUNAL FOR BEING CONSIDERED FOR REGULAR ASSESSMENT. AFTER ORD ER OF THE TRIBUNAL THE TOTAL ADDITION MADE BY THE A.O. WAS REDUCED TO RS.3 64 290/- EXCLUDING THE UNDISCLOSED INCOME AS RETURNED BY THE ASSESSEE AMOUNTING TO RS.1 04 000/-. THE ADDITION SUSTAINED BY THE TRIBUNAL WERE AS UNDER :- A) UNEXPLAINED INVESTMENT AS PER PARA 14 OF THE IT AT ORDER RS.2 11 379/- B) DEBIT BALANCE AS PER PARA 14 OF THE ITAT ORDER RS.17 911/- C) INITIAL INVESTMENT AS PER PARA 16 OF THE ITAT O RDER RS.1 35 000/- ----------------- TOTAL RS.3 64 290/- ----------------- 3. THE A.O. IMPOSED PENALTY UNDER SECTION 158BFA(2) TO THE EXTENT OF RS.6 00 000/- BEING 300% OF THE TAX TO BE EVADED. WHEN THE MATTER WENT BEFORE THE CIT(A) HE REDUCED THE PENALTY TO THE MINIMUM AT RS.2 14 080/-. 4. LD. A.R. BEFORE US VEHEMENTLY SUBMITTED THAT THE ASSESSEE DID NOT CONCEAL ANY INCOME. THE CORRECT INCOME WAS DISCLOSED IN THE RETURN. TH E ADDITION IN THE BLOCK ASSESSMENT AS 3 SUSTAINED BY THE TRIBUNAL ARE MERELY ON ESTIMATE BA SIS. EVEN OTHERWISE ALSO THE ASSESSEE WAS HAVING AGRICULTURAL INCOME DURING THE BLOCK PERIOD WHICH WAS AVAILABLE WITH THE ASSESSEE FOR INVESTMENT. CHART SHOWING THE INCOME AVAILABLE TOW ARDS AGRICULTURE WITH THE ASSESSEE WAS FILED BEFORE US. THE TRIBUNAL HAS ALSO NOTED THE AGRICUL TURAL INCOME AT RS.2 52 800/- DURING THE PERIOD 1990-91 TO 2000-01. 5. WE HAVE GONE THROUGH THE RELEVANT FINDINGS OF TH E TRIBUNAL IN RESPECT OF THE ADDITION MADE TO THE EXTENT OF RS.3 64 290/- TOWARDS THE INV ESTMENT. FROM THE ORDER OF THE TRIBUNAL AT PARA 14 IT IS APPARENT THAT THE ADDITION TOWARDS IN VESTMENT HAS BEEN SUSTAINED MERELY ON ESTIMATE BASIS. THE QUANTUM IS NOT BASED ON THE FIGURES APP EARING IN THE SEIZED PAPERS. THE ADDITION OF RS.2 11 379/- HAS BEEN ESTIMATED AS 20% OF THE SALE AMOUNT BEING INVESTED BY THE ASSESSEE IN STOCK. MERELY THE SUM OF RS.17 911/- WERE ADDED RE FLECTING THE EXCESS OF THE PAYMENT OF OVER RECEIPT ON VARIOUS DATES. THE SUM OF RS.1 35 000/- HAS ALSO BEEN CONFIRMED BY THE TRIBUNAL ON ESTIMATE BASIS AS PER FINDING GIVEN UNDER PARA 19 O F ITS ORDER DATED 17.11.2006. THE ASSESSEE HAS DISCLOSED THE UNDISCLOSED INCOME AT RS.1 04 000/-. IN OUR OPINION THAT INCOME WILL ALSO BE AVAILABLE WITH THE ASSESSEE TOWARDS THE INVESTMENT EVEN THOUGH NO PENALTY CAN BE IMPOSED ONCE THE ADDITION IS MADE ON ESTIMATE BASIS. WE ALSO NO TED THAT IN THIS CASE THE ADDITION MADE ON ESTIMATE BASIS TOWARDS INVESTMENT IS ALSO COVERED B Y THE AGRICULTURAL INCOME OF RS.2 52 800/- AND THE UNDISCLOSED INCOME DISCLOSED BY THE ASSESSE E TO THE EXTENT OF RS.1 04 000/-. IF THE FUND TO THAT EXTENT IS AVAILABLE TO THE ASSESSEE THE NE T DEFICIT TOWARDS THE ESTIMATE ON INVESTMENT WILL REMAIN ONLY TO THE EXTENT OF RS.7 490/-. KOLKATA B ENCH OF THIS TRIBUNAL IN THE CASE OF DCIT VS. SURESH KUMAR 284 ITR (AT) 104 (KOLKATA) WHILE DEAL ING WITH THE PENALTY HELD THAT THE WORD MAY IN SECTION 271(1)(C) INDICATE THAT THE AUTHOR ITY CONCERNED HAS A DISCRETION EITHER TO LEVY OR NOT TO LEVY PENALTY. THE POWER TO IMPOSE PENALTY H AS TO BE EXERCISED JUDICIALLY WITH DUE REGARD 4 TO ALL THE FACTS AND CIRCUMSTANCES OF EACH CASE AND CANNOT BE EXERCISED MECHANICALLY. THE PROVISIONS OF SECTION 158BFA(2) ARE SIMILAR TO THE PROVISIONS OF SECTION 271(1)(C). THEREFORE THE RATIO OF THE KOLKATA BENCH OF THIS TRIBUNAL WIL L EQUALLY BE APPLICABLE AND THE PENALTY UNDER SECTION 158BFA(2) IS NOT MANDATORY. DELHI TRIBUNAL IN THE CASE OF DHIRAJ SURI VS. ADDL. CIT 98 ITD 187 HAS HELD THAT EVEN IF THE ASSESSEE HAS NOT STRICTLY COMPLIED WITH THE CONDITIONS IMPOSED BY FIRST PROVISO TO SECTION 158BFA(2) AND EVEN WHER E SECOND PROVISO IS ATTRACTED STILL IT WOULD BE WITHIN POWERS OF THE INCOME TAX AUTHORITY NOT TO LEVY PENALTY HAVING REGARD TO BONA FIDE OF ASSESSEES CONDUCT CO-OPERATION SHOWN IN COMPLETIO N OF BLOCK ASSESSMENT AND GENERAL CONDUCT OF ASSESSEE IN COURSE OF ASSESSMENT PROCEEDINGS. I MPOSITION OF PENALTY IS NOT AUTOMATIC EVEN THOUGH EMANATING FROM THE PROCEEDINGS OF THE ASSESS MENT. PENALTY PROCEEDINGS AND THE ASSESSMENT PROCEEDINGS BOTH ARE DIFFERENT. WHERE T HE BASIS OF THE ADDITIONS IS AN ESTIMATE WE ARE OF THE VIEW THAT THE PENALTY CANNOT BE IMPOSED AS THE FACTUM OF CONCEALMENT WAS NOT PROVED BEYOND THE SHADOW OF DOUBT. THE ADDITIONS IN THIS CASE WERE MADE MERELY ON ESTIMATE BASIS. WE THEREFORE DELETE THE PENALTY IMPOSED UNDER SEC TION 158BFA(2). 6. IN THE RESULT APPEAL OF THE ASSESSEE STANDS ALL OWED AND THAT OF THE REVENUE STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 21.04.2010) . SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 21 ST APRIL 2010. PBN/* 5 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR ITAT AGRA BENCH AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL AGRA TRUE COPY